U.S. Treasury Sells 110 Million Shares of GM Stock, Reducing Stake to 7.3%
The United States Treasury has reduced its stake in General Motors to 7.3% after selling off another block of the shares it acquired during the bailout of the giant automaker. According to documents released earlier this week cited by Reuters, the Treasury sold at least 110 million shares between May 6 and September 13, raising more than $3.82 billion.
The U.S. government’s stake in GM is now down to 101 million shares, which means that more of GM is currently owned by the provincial Ontario and federal Canadian governments, 110 million shares, than by the U.S. Treasury. The U.S. government’s share in GM was originally almost 61%. Treasury put $49.5 billion into General Motors during the bailout and the agency says that it has recovered $35.4 billion so far.
“We remain on track to complete our exit from GM by early next year at a cost far less than originally projected,” Treasury Assistant Secretary Timothy Massad said in a statement. GM shares closed Tuesday at $36.71, making those 101 million remaining shares worth about $3.7 billion. If current stock prices hold, once divested, Treasury will likely lose about $10 billion on the bailout of GM.
Some analysts have predicted that once that full divestment is completed, GM may again start paying dividends on common shares, which it hasn’t done since the second quarter of 2008. GM executives have declined to comment on possible dividends, saying that the automaker’s current focus is on reinvesting in company operations.
This will end a sad chapter in GM history. I think it is good for everyone involved that the governments of US and Canada have decided to sell their stock sooner. In less than one year, they have sold off 439 Million shares. The remaining 211 million shares should be sold off within the next 6 months. This should remove all downward pressure letting the stock rise dramatically. The bailout couldn't have been a win-win for all parties involved. If GM was loaned the money instead, they wouldn't have been able to pay it back, putting them in the same situation they were before the bailout. While I agree the the UAW received preferential treatment for political reasons, they will continue to be an important part of GM and it was the correct thing to do. The $10 Billion loss will be more than offset with what we would have had to pay for unemployment benefits and welfare for not just GM workers but the cascading effect on other businesses. GM has already invested as much into North American operations. GM will be paying back many times over that in payroll and sales taxes in the coming years. Whatever the reasons, I think we can all agree that GM is much better off now than they were in 2008. 14 straight quarterly profits, stabilizing European operations, great products, and good reliability and satisfaction ratings. There is a lot of work ahead and GM still has a lot to prove. They are on the right track.
@ alluster..Well said, and I sure hope your right.
As someone who was and still is very much against this type of taxpayer funded bailout, I am happy to see the government getting out of this mess. Once the taxpayer money is divested, minus the $10 billion loss, I'll get some popcorn ready for the next round of bailouts. Those banks and car makers are still too big to fail. This guarantees we'll see this action again.
Politicians should of said, "we will bail you out, but you stop setting up shop in Mexico or South East Asia". Should we feel all warm and fuzzy all over when we see the new Colorado sitting on the GM lots? (Engineered by Brazilians and tested and built in Thailand) Gotta love how our tax dollars helped the economy and all that. Shouldn’t GMC be celebrating its 4th birthday not 100th since old GMC died in 2008 with all of that extra debt and New GMC started right after?